The Real Cause of Income Inequality

Jarl Jensen | April 15, 2019

The statistics are abysmal — 50% of Americans have less than $500 in savings.

Jobs are going to the poor, but having a job simply means that they go from being poor to being working poor. Having a job does not mean that they have prosperity. Meanwhile, income gains are going to the rich.

The experts and authorities review the numbers instead of looking at the people and they applaud the tiniest of wage growth.

The truth is that wages relative to the cost of living have been flat for decades. To catch up, wages would need to double — or even triple — just to make up for lost ground.

What is the cause of this wage gap?

Technology’s Role in the Job Market

Technology, automation, and ‘progress’ play a role in suppressing the value of work. After all, if a machine can do the same work as people for less money, then companies are forced to adopt it in order to remain competitive.

Yes, it’s true that some jobs are created by machine workforces. People are needed to develop the technology and perform maintenance. However, this is far fewer people than the ones replaced by the machines.

Also, new technology is expensive to research and develop. How are so many companies able to afford it?

The banking system enables technology research, development, and acquisition.

Banks allows billions of dollars of resources to be used by lending money to technology companies. Banks also lend money to the companies that buy the technology that ultimately replaces people and puts them out of work.

King businessman with money sack in office

Trickle-Down Economics

The real culprit is trickle-down economics.

It’s a common term that is misunderstood and ridiculed as not working. Trickle-down economics is the idea that the poor people will get what they need through the trickle down spending of wealthy people.

Even though people say trickle down economics doesn’t work, it is the only thing that has existed for the last 70+ years.

Money is not the only thing that trickles down.

Houses trickle down, work trickles down, cars trickle down — everything in our trickle-down economic system comes from wealthy people. The key to understanding trickle down is the realization that wealthy people get their money from banks through loans.

Trickle-down economics is a function of the modern banking system.

Wealthy people are wealthy because of their assets, and their assets have value because they can be liquidated or leveraged into cash through loans.

Why do houses, cars, and just about everything else trickle down from wealthy people?

The houses the wealthy and middle class lived in the 50’s are lived in by the poor today.

The poor buy rich people’s used cars.

The iPhone was developed for rich people and rich people get new phones every year. Poorer people buy used phones.

The idea with trickle down economics is that money will eventually make it down to the poor — as long as the poor are somehow lining up to work for the wealthy who have access to loans from the banks.

Technology represents a little dam, or a plug in the whole of a dam, that allows less money to trickle down to the poor. Technology is therefore making trickle-down economics even more dysfunctional and the main source of income inequality.

The Cost of Living

Meanwhile, the cost of living keeps going up. Rising costs of basic necessities leaves less and less money for everything else.

Why does the cost of living keep going up? It’s because housing is trickled down to the poor.

Houses are not built for the poor. Houses are built for the rich. When the rich are done with those old houses they sell them to the poor. This leaves a constant shortage of homes for poor people since poor people outnumber rich people.

How did we get into this mess?

Banks were given full control of the American economy in the Federal Reserve Act of 1913. The Federal Reserve — which is America’s central bank — is owned and operated by commercial banks and not the federal government.

The Federal Reserve is mandated to keep inflation low, full employment, and the financial system healthy. The Federal Reserve does all this by simply lowering and raising interest rates on loans — loans that only wealthy people are qualified for.

Hence, the American economy has been moving into a complete trickle-down economic system for over a hundred years.

What did the economy look like before trickle-down economics took over?

It used to be that a person could hunt or farm for a living. There used to be hundreds and thousands of occupations that did not require assets and an education to make a living.

People simple contributed to society through work. This is no longer the case. Trickle-down economics restricts the potential to earn money as the flow of trickle-down economics is restricted with cost-saving technology that is made affordable by banks.

Wondering What Else You Need to Know?

Read my books and blogs and find out what is really going wrong with our world. I explain the economic state of affairs in a way that’s easy to understand.